Let there be gas!

KLAIPEDA - The Independence, Lithuania’s newly purchased Liquified Natural Gas (LNG) storage vessel, arrived at Klaipeda’s LNG terminal on Monday 27. Oct, inspiring hopes of increased energy security in the Baltics.
At the welcoming ceremony, Lithuanian Prime Minister Algirdas Butkevicius stressed it was a historic day not only for Lithuania, but for the Baltic region as a whole, the PM’s press service has informed.

“The regional LNG terminal in Klaipeda opens up opportunities for Latvia and Estonia and all Baltic countries, to make use of alternative sources of gas supply, to obtain competitive prices, to integrate into the internal European Union market and to reinforce our common energy security. Moreover, the influence of this facility in the negotiations on reduced gas prices for Lithuanian consumers is already felt even before the start of its operation,” he said.
No time for delay

“Being late was not an option, although we had to solve a number of puzzles in the course of construction,” Butkevicius continued. “I am proud to say that Lithuania has managed to build this terminal, the first of its kind in Europe, at a record speed of 1.5 years. This was a very complicated project, carried out in the vicinity of a UNESCO-protected area, in line with environmental regulations. It demanded novel technical solutions and a high level of expertise.”
The Lithuanian government also received a letter of congratulations from US Secretary of State John Kerry, who says that regional coordination on energy policy and the realisation of such critical projects are now more important than ever to ensure a stable energy future for Europe.

“Our longstanding friendship with Lithuania is grounded in our shared support for democracy, human rights and free markets. The opening of the Klaipeda LNG terminal represents a historic milestone in the Baltic States’ energy security. We commend Lithuania’s strong and sustained leadership and strategic vision to bring this and other critical energy diversification projects to fruition,” reads the US Secretary of State’s letter.

The terminal will be the key instrument in ensuring diversification of the supply of energy resources as well as a real source of alternative supply of natural gas. It will consist of three major parts: a floating storage with a re-gasification unit, a jetty for mooring, and a high pressure gas pipeline connected to the main pipeline. The capacity of the terminal will be sufficient to satisfy the needs of all Baltic states. If necessary, the Klaipeda LNG terminal can serve and fulfill about 90 percent of the gas supply needs of Lithuania, Latvia, and Estonia.

Based on the European Commission’s report on the resilience of the European gas system, the Klaipeda LNG would protect consumers of Lithuania, Latvia and Estonia in case of a possible disruption of gas supplies.
The importance of this terminal is recognized at the EU level. In the Commission’s European Energy Security Strategy presented last May, the Klaipeda LNG terminal is included as number one in the list of infrastructure projects that contribute to ensuring the security of EU supplies.

Until now, Lithuania has been purchasing gas from the single gas supplier: the Russian monopolist Gazprom. The terminal will enable Lithuania to purchase gas from multiple suppliers. An agreement for the purchase of gas has already been concluded with Norwegian company Statoil; and, if necessary, Lithuania has an opportunity to buy gas from other suppliers in the global market.

Estonian-Finnish pipeline – feasible, or just hot air?
Meanwhile on Oct. 30 Estonian Prime Minister Taavi Roivas discussed with his Finnish counterpart Alexander Stubb the prospect of concluding an interstate agreement that would help both countries move ahead with the Estonian-Finnish gas pipeline and LNG terminal issues, as reported by Delfi Arileht. A final agreement has yet to be achieved but Roivas was optimistic after his discussion with Stubb that an agreement could be reached during his next visit to Helsinki, on Nov. 6-7.

Orileht said that according to information available, the Estonian government is ready to agree that the LNG terminal— the location of which the two states have consistently been unable to agree upon — would be offered to Finland with the aim of rapidly completing the Finnish-Estonian gas pipeline required to connect the Finnish and Baltic gas markets.
“I would not reveal that yet,” said Roivas, hinting at financing being the main reason. “The European Commission will support in substantial part the financing of the pipeline. Whether and how much it is possible to support the terminal investment, is still not clear,” said the prime minister, adding that Estonian consumers would not be able to pay the terminal building costs via gas tariffs.

If the terminal was built in Estonia, Finland wouldn’t be interested in the gas pipeline which would help share costs at a bigger market, Orileht said. At press time, an accord on an Estonian-Finnish pipeline had yet to be reached.